Eq: Dividends

(New York)

Something the market has not had to deal with for some time is once again occurring. That change? Slumping buybacks. Hiked dividends and big buybacks have been staples of the this historic bull run, but the latter are starting drying up. Share repurchases shrank for the first time in seven quarters in the second quarter. The total amount of buybacks—over $200 bn—is still quite robust, but it is a sign that companies are tightening up, which could be indicative of the overall direction of the economy.

FINSUM: This is immaterial. In 2018, companies spent $800 bn on buybacks, so $205.8 bn (the 2nd quarter’s figure) is actually ahead of pace.

(New York)

Dividend stocks have been an interesting case over the last few quarters. In the fourth quarter, when interest rates looked to be headed higher, they actually outperformed the market (counterintuitively). This year, as rates look to be headed lower, they have performed quite well (up 16%), but still lagged a bit behind the S&P 500. The question is where they go from here, and all signs point to higher given the prevailing rates environment and general anxiety. The trick is buying the right ones, as financials and healthcare offer better value than more traditional areas like utilities, real estate, and consumer staples.

FINSUM: We think these are good sector selections as they have not seen as much price inflation as the more common dividend choices. Healthcare seems particularly interesting given that it is quite recession-resistant.

(New York)

On paper, right now seems like a great time for dividend stocks. The rate environment is trending downward, which is very beneficial, and dividend stocks tend to provide a safe haven for a possible bear market or recession. But which to choose? You need to be careful to select stocks with sustainable payouts or they will have a high beta in a down market. With that in mind, take a look at these 5 dividend stocks: Exxon Mobil (4.6%), Chevron (3.9%), Excelon (2.9%), Prologis (2.6%), and NextEra Energy (2.4%).

FINSUM: These are pretty energy heavy, but the bigger point here is that it is a good time to buy dividend payers.

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